Absorption costing income statements are produced for:
A)External decision makers
B)Internal decision makers
C)Cost-volume-profit analysis
D)Only for top management

Question

Quizplus · Accepted Answer

Absorption costing income statements are primarily produced for external decision makers, such as investors, creditors, and regulatory bodies, to provide them with a complete picture of the cost of producing a product or providing a service. These statements include all production costs, including variable and fixed costs, and allocate fixed overhead costs to the units produced based on a predetermined rate. This provides a clearer understanding of the true cost of production and helps decision makers make informed decisions about financial performance and the viability of investments.

Absorption Costing Income Statements Are Produced For